We’ve got a Section 6662(h) 40% overvaluation chop and the usual accuracy chops here.The issue is which Boss Hoss was whose Boss Hoss, who approved what and how did they do it, with another whistlestop by Greenberg’s Express.

If you’re new to this evergreen kerfuffle, read Judge Buch’s order, and all will be made somewhat less obscure.

The Tribuners want a bushelbasket of documents, claiming IRS’ privilege log is a blanket, not a veil.

Judge Buch dissects some of what IRS gave the Tribuners, allows some of their demands but squelches others. Since he doesn’t tell us which documents are which in all cases, the parties may be enlightened, but I’m not.

Howbeit, here’s the main takeaways.

“The documents and information sought by Tribune in its third Branerton request are not reasonably calculated to lead to the discovery of admissible evidence, and the request is not proper under Greenberg’s Express, Inc. v. Commissioner, 62 T.C. 324 (1974). We have previously stated that ‘it would be imprudent for this Court to now begin examining the propriety of the Commissioner’s administrative policy or procedure underlying his penalty determinations.’ It has long been settled law that we do not look behind the Commissioner’s determinations. When Congress enacted section 6751(b) it ‘understood the longstanding rule of Greenberg’s Express * * * and at that time did not deem it necessary to expand our jurisdiction or overturn our precedent’. Written supervisory approval under section 6751(b)(1) ‘requires just that: written supervisory approval’; we do not review or second-guess the approval itself. We make our own de novo determination of the applicability of any penalty; we do not conduct a review of the Commissioner’s policies or procedures in determining penalties other than to confirm that written supervisory approval occurred.” Order, at pp. 6-7. (Footnotes omitted, but they all cite to Raifman; see my blogpost “Too True to Be Good,” 7/3/18 for the end of the Raifman saga.)

As for logging, IRS needs to provide a supplementary log, knocking out what Judge Buch allows today.

“We have held that many of the items requested by Tribune are irrelevant. Our ruling may well render many (or all) of the items on the privilege log as outside the scope of discovery. Rather that waste the Court’s resources evaluating privilege claims that have been rendered moot, we will order the Commissioner to produce an updated privilege log containing only those privileged items that remain responsive to the requests addressed in this order.

“In producing that privilege log, we remind the Commissioner that the burden of proving that a privilege applies to a communication is on the party asserting the privilege. We have held that ‘[b]lanket claims of privilege * * * are insufficient to sustain a claim of attorney-client privilege.’ The Tax Court Rules of Practice and Procedure are silent on the issue of proving a privilege applies; therefore, we look to the Federal Rules of Civil Procedure. The Federal Rules of Civil Procedure provide that the party asserting privilege must ‘describe the nature of the withheld documents, communications, or tangible things in a manner that, without revealing information itself privileged or protected, will enable the parties to assess the claim.”

“An adequate privilege log is a method by which a party may meet its burden of proof. A privilege log must set forth adequate facts to establish each element of the claimed privilege. The privilege log must contain enough detail to enable the requesting party and this Court to determine whether the privilege is properly asserted. This would typically include information regarding who a communication is from and to, the date of the communication, and its subject matter. A privilege log that does not state the subject of the communications at issue or indicate the contents of a document is insufficient.” Order, at pp. 8-9. (Footnotes omitted, but you can see my blogpost “Privileged Characters – Part Deux,” 5/26/15, for the Pacific Management story.).

An author, teacher, advocate and trusted advisor, Lew Taishoff is a New York City-based attorney with 52 years of experience in corporate and individual tax and real estate matters. He is an Enrolled Agent, examined and admitted to practice before the Internal Revenue Service, and admitted to practice before the ... Continue reading →